Brazil's Feb trade balance surprised on the upside, registering a surplus of $3.0bn, the largest for the month in the historical series. Year-to-date, the trade balance has accumulated a surplus of $4.0bn, compared with a deficit of $6.0bn for the same period last year.

Increase in exports was a major contributor, highlight being the manufacturing sector, in which exports increased 9.6% y/y. On the other side, imports continued to fall significantly, by 34.6% y/y (adjusted by working days).

"We forecast that for the whole year, exports will increase a marginal 5.0% (1.5pp driven by prices and 3.5pp by volume), while imports should decline 5.9%, which leads to a trade balance of $37bn (2.7% of GDP), up from $17.7bn last year (1.0% of GDP)." said Barclays in a report.

However, the BRL has been under pressure from political developments and medium-term concerns about debt sustainability are likely to remain present in the foreseeable future. Hence improvement in trade balance does not alleviate pressures on the BRL.